Sphingomyelin (SM) is the most abundant phospholipid in plasma next to phosphatidylcholine (PC), and is an essential component of cell membrane rafts. Although recent epidemiologic studies suggest that high SM levels in plasma increase the risk of atherosclerosis, the underlying mechanisms are unknown, because the normal functions of SM have not been elucidated. We propose that, because of its unique structure, and localization in the outer surface of cells, SM protects the integrity of cell membranes by inhibiting the phospholipase and lipid peroxidation reactions. Furthermore, we propose that because of its affinity to cholesterol, SM regulates cell cholesterol homeostasis and reverse cholesterol transport. Dysregulation of these functions could lead to inflammation and promote atherosclerosis. In Aim 1, we propose to test the hypothesis that SM regulates reverse cholesterol transport, focusing on its role in the efflux of cholesterol from macrophages, and in the esterification of cholesterol by LCAT. The novel hypothesis that SM acts as a chaperone for cholesterol during ABCG1 transporter-mediated efflux will be explored. The role of SM in the regulation of LCAT in physiological systems will be studied. In Aim 2, we will investigate the hypothesis that SM acts as an anti-inflammatory lipid by inhibiting the formation of pro-inflammatory lipids such as lyso PC, arachidonate, oxidized phospholipids and oxysterols. The hypothesis that SM competitively inhibits all enzymes that utilize PC as substrate will be tested with respect to secretory phospholipases and endothelial lipase. The inhibitory role of SM in the generation of pro-inflammatory oxidized PCs and oxysterols will be tested in lipoproteins and cell membranes. The effect of SM deficiency on the macrophage and neutrophil function, including cytokine production and superoxide generation, will be studied in myeloid-specific SM-deficient mice. In Aim 3, the role of SM and ceramide in cellular cholesterol homeostasis will be studied by determining their effects on cholesterol trafficking between cellular compartments and between cells and their environment. These studies will provide novel insights into the physiological role of this important phospholipid, and could possibly identify novel therapeutic targets against inflammation and atherosclerosis.